Software accounts for ‘less than 10pc of Irish IT spend’

12 Oct 2006

Irish spending on software is the lowest in Europe, accounting for less than 10pc of budgets, a new report from Forrester Research has claimed.

Overall, software has the smallest share of European IT budgets, the report found. For the whole of Europe, just 15pc of total IT budgets are spent on software. Norway and Ireland devote the lowest shares of their IT budgets to software, at under 10pc each.

However, Ireland is among a raft of countries where software spending is forecast to be above the average, at 7pc or more. For Europe as a whole, purchases of new software products will grow by 4pc this year following stronger growth of 7pc in 2005, Forrester said.

The report identified different reasons why other countries intend to allocate above-average shares of their IT budgets to software in 2006. In the case of Sweden, Denmark and Iceland, it is due to high adoption of software in their business operations. For Poland, the Czech Republic and Hungary it is because they are modernising their business operations to become more competitive with the older EU member states, Forrester said.

The largest tranche of European tech spending goes on IT staff costs, the report found. Not including telecoms, the average outlay for IT staff is 31pc. Ireland scored above the average in this category, along with Italy, Spain, the Netherlands, Switzerland, Belgium, Denmark and Austria.

The report also charted 2006 IT investment as a percentage of gross domestic product (GDP); Ireland was last on this list with just 1.2pc. Switzerland ranked highest with 5.1pc and is the only European country to outscore the US for intensive use of IT, Forrester said.

Looking at the wider picture, technology spending in Europe remains lower than that of the US but growth rates are catching up, the report found. Although the collective GDP of western and central European countries is greater than that of the US, total European IT spending on computer and communications equipment, software, IT services and outsourcing and IT staff is still lower than US IT spending, an estimated US$565bn billion for Europe compared with US$721bn in the US.

Growth in European IT spending is starting to match or exceed US IT spending, Forrester pointed out. Measured in US dollars, European IT spending is forecast to grow by 5.1pc in 2006, almost as high as the US growth of 5.8pc. Next year it is set to slow to 3.7pc, in line with lower US tech spending of 2.9pc.

By Gordon Smith